Ruling on application of principle of equal procedural treatment for foreign nationals

In August 2015 a new Civil and Commercial Code entered into force in Argentina. Under this highly anticipated legislation, civil and commercial matters that were previously governed by separate acts are now governed by a new, single and restructured legal framework.

The new code introduced key changes to the Argentine legal system, including a specific chapter on private international law and international jurisdiction. Among its innovations, the act introduced the principle of equal procedural treatment for foreign nationals, granting non-nationals free access to Argentine courts.

This new standard has raised questions about the validity of the arraigo preliminary objection under local procedural codes. According to this rule, certain foreign nationals may be required to provide a bond or similar undertaking when litigating before Argentine courts with respect to the costs associated with such proceedings.

In a recent ruling issued in Eguiguren Laborde v Chiramberro Larrategui, the Court of Appeals in Civil Proceedings explained the impact of the principle of equal procedural treatment on the arraigo preliminary objection, which is still formally in force.

Section 2610 of the new code – which draws on the 1992 Mercosur Convention on Cooperation and Jurisdictional Assistance in Civil, Commercial, Labour and Administrative Matters – stipulates that citizens and permanent residents of foreign countries enjoy free access to jurisdiction to defend their rights and interests under the same conditions as citizens and permanent residents of Argentina.

Further, this provision establishes that no security for legal costs or deposits can be imposed on foreign nationals or permanent residents of other states based on their status as a citizen or permanent resident of another country. The new code clarifies that this principle also applies to legal entities which are constituted, authorised or registered under the laws of a different state.

Recognition of the principle of equal procedural treatment is considered to be an expression of Section 20 of the Constitution, which states that "[f]oreigners enjoy in the territory of the Nation all the civil rights of [Argentine] citizens". However, this principle was not previously recognised by the Civil Code or the Commercial Code.

Conversely, according to local procedural rules, foreign individuals or companies that do not maintain a domicile or retain immovable property in Argentina may be required by the intervening court – as a preliminary objection – to provide a bond or similar undertaking. The purpose of this procedural provision is to guarantee legal costs that could derive from an adverse result for the foreign litigant. This requirement is found in Section 348 of the Federal Code of Civil and Commercial Procedure and other procedural codes enacted in provincial jurisdictions.

It was thought that the arraigo preliminary objection would not apply where an international treaty between Argentina and the foreign litigant's country of origin dispensed with the security-for-cost requirement (eg, the 1954 Hague Convention on Civil Procedure or the 1992 Mercosur Convention on Cooperation and Jurisdictional Assistance).

The claimant, an individual residing abroad, initiated an exequatur proceeding to obtain local recognition of a foreign judgment. In response, the defendant filed an arraigo preliminary objection under Section 328 of the Federal Code of Civil and Commercial Procedure.

The first-instance judge upheld the objection and ordered that before continuing with the proceedings, the claimant had to post a bond to guarantee the legal costs in the event that its complaint was dismissed.

On September 18 2015 the Court of Appeals in Civil Proceedings unanimously upheld the claimant's appeal and reversed the first-instance ruling. To that extent, the court held that the arraigo preliminary objection contained in local procedural codes should be considered to have been repealed following the entry into force of the principle of equal procedural treatment for foreign nationals under Section 2610 of the new Civil and Commercial Code.

In this regard, the court emphasised that the principle of equal treatment is not new to the Argentine legal system; it has already been recognised in the Constitution and international conventions to which Argentina adheres. The court also clarified that it had previously ruled in a contrary manner, but that had been before the new code's entry into force.

The court ruled that under Section 2610 of the new code, foreign nationals are granted free access to Argentine courts to defend their rights on an equal basis with permanent residents in Argentina.